U.S. Beef Trade

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U.S. Beef Trade

• Brett Stuart

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Economic Turmoil / Credit Crisis

• Meat export deliveries lag transactions by weeks
  exaggerating credit freeze impact
• Global shipping falls to a standstill (container
  rates from Asia EU hit ZERO in January 09 Baltic
  Dry Index down 96)
• Rapid dollar appreciation shifts global pricing
• Economic uncertainty globally drives consumer
  belt-tightening
• Consumer demand varies by country, but remember
  U.S. beef is the discount beef in key markets
  (Japan, S.Korea)

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Source Pacific Exchange Rate Service
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Global Supply / demand
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Globalization

• The flow of capital and equity in the
  meat/livestock industries is increasing
• JBS (22 countries)
• COFCO (China) buying 7 million shares from
  Smithfield Tyson formed 3rd joint venture in
  China (poultry)
• Marfrig (Brazil) rapidly expanding overseas
  investment (Pemmican jerky line - ConAgra, OSI in
  Europe/BRZ)
• Sadia (Brazil) poultry in Russia and UAE
• Goldman Sachs 60 of Shanghui group, 13 of
  Yurun Food Group, 10 hog farms 300 million
  (all China
• Deutsche Bank 30 of unnamed Chinese hog farm,
  other J.V.s in China

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Global Meat Forecasts
Added 2008-2017 Beef 11 mmt Pork 21
mmt Poultry 18 mmt
Source FAO/OECD Forecasts
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Global Beef Trends
2009 F
Source USDA/FAS, CattleFax Projections
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76 of US beef exports go to Mexico, Canada,
Japan, and S. Korea
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Global Beef Trends 09 Steady/Lower
Source USDA/FAS, CattleFax Projections
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U.S. Trade
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U.S. Meat Exports in 2009
Source USDA, CattleFax Projections
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U.S. Beef Trade and Forecasts
Exports
Source U.S. Dept of Commerce, forecasts by CF
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Bottom Line Future of U.S. Beef Exports

• Global demand will outpace supplies
• However, ACCESS is a much bigger factor
• Japan, China, EU, Mexico
• Russia, Mexico
• Exports of competing species critical to net meat
  supply equation
• Disease issues are alive and well (PRRS, AI, FMD)

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Key Considerations for 2009

• Exports to NAFTA (Canada/Mexico) are critical,
  worth 50-60 per head
• Trade friction with Mexico is HIGH
• 12 months of access to S. Korean market 468 mil
  lbs

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Another Key Factor 2009

• Expanded Japan access would be significant to
  U.S. cattle industry ( 3-4/cwt live)
• Currently at 24 of pre-BSE levels (19 mil
  lbs/week)
• 373 million in 2008 vs 1.4 billion in 2003
• Japan has previously offered access lt 30 moa
• lt30 moa would restore 95 of pre-BSE volumes

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